Prevent the Use of Cryptocurrencies for Money Laundering, Japan Urges G20 Nations

A report by Reuters indicates that Japan is planning to urge its G20 counterparts to implement common global rules that will help fight the use of cryptocurrencies for money laundering. A government official with direct knowledge about the plan does not expect the G20 finance leaders to agree on common global rules on the matter though, as each country has a different approach on how they deal with cryptocurrencies.

One of the officials told Reuters,

Discussions will focus on anti-money laundering steps and consumer protection, rather than how cryptocurrency trading could affect the banking system,

Leaders Wary of Stringent Measures

Finance ministers and central bankers of the Group of 20 major economies will meet in Buenos Aires on March 19-20th, with cryptocurrencies set to be on the agenda. However, the majority of them feel that too many rules and laws governing cryptocurrencies may not work.

The general feeling among the G20 members is that applying too stringent regulations won’t be good,

-Said the Japanese official.

The Paris-based Financial Action Task Force (FATF), a 37-nation group set up by the G7 industrial powers to fight illicit finance, will report its findings to the G20, on ways to keep cryptocurrencies from being used for money laundering.

Japanese policy makers and regulators fear that although majority of G20 members agree that there is need to implenent stringent measures to address the matter, some nations have looser regulations than others, thereby leaving lots of loopholes for money laundering, explained the official.

Japan became the first nation in the world to enact a national system that oversights the trading of cryptocurrencies. The country has also carried out mass checks and investigations on different exchanges in the country, after a theft of $530 million from the Coincheck exchange.

European Countries Unite for a Common Action

CCN reports that Germany and France are leading efforts to have other countries in the Europe join them for a joint action on how to regulate Bitcoin. A European Union financial watchdog official said that a short-term strategy could apply the rules from anti-money laundering and terrorist financing, warn consumers about the risk of trading cryptocurrencies and prevent banks from holding them.

Germany and France top financial heads have also written to the G20 members, urging them to take the right actions to deter cryptocurrencies from undermining global financial stability.

We call for international harmonized actions which recognize the trans-boundary implications of cryptocurrencies,

-Reads part of the letter.

The two countries argue that while it’s good to acknowledge the fast evolving nature of cryptocurrencies, it’s also important to note the risks they pose to investors, and their vulnerability when used in financial crimes.

However. the nations face a challenge as to how to apply such measures and rules, to prevent the use of cryptocurrencies in illicit activities and protect consumers, without stifling the innovation involved in the cryptocurrency and blockchain industries.

Do you think there should be harmonized global measures to prevent cryptocurrencies from being used for financial crimes? Share your thoughts with us in the comments section.